[Federal Register Volume 75, Number 118 (Monday, June 21, 2010)]
[Notices]
[Page 35098]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14827]


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OFFICE OF PERSONNEL MANAGEMENT


Federal Employees' Retirement System; Normal Cost Percentages

AGENCY: Office of Personnel Management.

ACTION: Notice.

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SUMMARY: The Office of Personnel Management (OPM) is providing notice 
of revised normal cost percentages for employees covered by the Federal 
Employees' Retirement System (FERS) Act of 1986.

DATES: The revised normal cost percentages are effective at the 
beginning of the first pay period commencing on or after October 1, 
2010. Agency appeals of the normal cost percentages must be filed no 
later than December 21, 2010.

ADDRESSES: Send or deliver agency appeals of the normal cost 
percentages and requests for actuarial assumptions and data to the 
Board of Actuaries, care of Gregory Kissel, Actuary, Office of Planning 
and Policy Analysis, Office of Personnel Management, Room 4307, 1900 E 
Street, NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Christopher Ziebarth, (202) 606-0299.

SUPPLEMENTARY INFORMATION: The FERS Act of 1986, Public Law 99-335, 
created a new retirement system intended to cover most Federal 
employees hired after 1983. Most Federal employees hired before 1984 
are under the older Civil Service Retirement System (CSRS). Section 
8423 of title 5, United States Code, as added by the FERS Act of 1986, 
provides for the payment of the Government's share of the cost of the 
retirement system under FERS. Employees' contributions are established 
by law and constitute only a small fraction of the cost of funding the 
retirement system; employing agencies are required to pay the remaining 
costs. The amount of funding required, known as ``normal cost,'' is the 
entry age normal cost of the provisions of FERS that relate to the 
Civil Service Retirement and Disability Fund (Fund). The normal cost 
must be computed by OPM in accordance with generally accepted actuarial 
practices and standards (using dynamic assumptions). Subpart D of part 
841 of title 5, Code of Federal Regulations, regulates how normal costs 
are determined.
    Recently, the Board of Actuaries of the Civil Service Retirement 
System concluded that there should be no change to the set of economic 
assumptions used in the dynamic actuarial valuations of FERS. The Board 
reviewed statistical data prepared by the OPM actuaries and considered 
trends that may affect future experience under the System.
    Based on its analysis, the Board concluded that it would be 
appropriate to assume a rate of investment return of 6.25 percent, with 
no difference from the existing rate of 6.25 percent. In addition, the 
Board anticipated a continued inflation rate of 3.50 percent, and a 
continued projected rate of General Schedule salary increases at 4.25 
percent. These salary increases are in addition to assumed within-grade 
increases that reflect past experience. The economic assumptions 
anticipate that, over the long term, the annual rate of investment 
return will exceed inflation by 2.75 percent and General Schedule 
salary increases will exceed long-term inflation by .75 percent a year, 
with no difference from the current assumptions.
    The Board adopted changes in the mortality assumptions as well as 
changes in all the demographic assumptions listed as factors under 
Sec.  841.404(a) of title 5, Code of Federal Regulations. In addition 
to the changes in mortality assumptions, the Board found that recent 
statutory changes, most significantly sections 1901 and 1904 of the 
National Defense Authorization Act for Fiscal Year 2010, Pubic Law 111-
84, 123 Stat. 2109, and a recent decision of the U.S. Court of Appeals 
for the Federal Circuit, Adkins v. Office of Personnel Management, 525 
F.3d 1363 (Fed. Cir. 2008), require increases in the normal costs.
    The normal cost calculations depend on economic, demographic, and 
mortality assumptions. The demographic assumptions are determined 
separately for each of a number of special groups, in cases where 
separate experience data is available. Based on the changes in the 
demographic assumptions, the economic assumptions, and the other 
factors described above, OPM has determined the normal cost percentage 
for each category of employees under Sec.  841.403 of title 5, Code of 
Federal Regulations. The Governmentwide normal cost percentages, 
including the employee contributions, are as follows:

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Members......................................................      19.2%
Congressional employees......................................      17.7%
Law enforcement officers, members of the Supreme Court             27.0%
 Police, firefighters, nuclear materials couriers, Customs
 and Border Protection Officers, and employees under section
 302 of the Central Intelligence Agency Retirement Act of
 1964 for Certain Employees..................................
Air traffic controllers......................................      26.8%
Military reserve technicians.................................      15.3%
Employees under section 303 of the Central Intelligence            17.6%
 Agency Retirement Act of 1964 for Certain Employees (when
 serving abroad).............................................
All other employees..........................................      12.5%
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    Under Sec.  841.408 of title 5, Code of Federal Regulations, these 
normal cost percentages are effective at the beginning of the first pay 
period commencing on or after October 1, 2010.
    The time limit and address for filing agency appeals under 
Sec. Sec.  841.409 through 841.412 of title 5, Code of Federal 
Regulations, are stated in the DATES and ADDRESSES sections of this 
notice.

U.S. Office of Personnel Management.
John Berry,
Director.
[FR Doc. 2010-14827 Filed 6-18-10; 8:45 am]
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